A large bitumen cargo is heading from the Mediterranean to Asia-Pacific with economics for the trade now viable, and regional traders say more could follow.
The 30,100 dwt Blacksmith, operated by trading firm Trafigura, loaded a 28,600t cargo from Aliaga (Izmir), Turkey on 17 June and is scheduled to arrive at Tanjung Langsat, Malaysia, around 10 July, according to vessel tracking data. Trafigura has storage at Tanjung Langsat, near Singapore.
Importers in Asia-Pacific said the Europe-Asia arbitrage is only feasible for the largest tankers and cargo sizes. Recent oil price volatility could make the trade risky, according to traders, but there is no sign yet of the price spread between Singapore and the Mediterranean closing. Some traders expect further cargoes to make the route.
Singapore prices were $184/t above those of the Argus Mediterranean bitumen index on a fob basis on 3 July. The spread was around $10/t in favour of Singapore at the start of June.
Singapore prices continued to rise slightly this week, supported by higher bids and buying indications along with continued tight supply. The daily fob Singapore ABX 1 assessment hit $610/t on 8 July.
Trafigura bid for a 4,000t cargo loading 23-27 July at $615/t fob Singapore on 8 July, including demurrage, on the Argus Open Markets (AOM) platform, but attracted no selling interest. The bid stipulated SRC and ExxonMobil supply only, and is understood to be part of a requirement to meet supply to Australia.
Longer lead times for shipping cargoes from Europe to Asia-Pacific have kept traders concerned that Asian prices could fall by the time the cargo arrives at its destination.
But Singapore supply is tight, which has supported export prices. July-loading supply is no longer widely available, and August-loading supply remains tight. At least one refiner has reported bitumen output disruptions because of feedstock issues.
Crude slates suitable for bitumen production may take longer to reach Singapore, keeping supplies limited for now, market participants said. Most have refrained from fresh offers.
Mediterranean bitumen supply has also been tight in recent weeks, particularly from Greece, as refiners grapple with the continued loss of much Mideast Gulf crude supply that is good for bitumen production. Greek refiner Motor Oil Hellas (MOH) has switched to lighter crudes and produced more jet fuel and diesel and less heavy products like bitumen.
Mediterranean bitumen prices have been pulled lower by a fall in high-sulphur fuel oil (HSFO) values since early June, even with some firming of the differentials to HSFO at which bitumen cargoes trade. Singapore cargoes trade at outright values and historically have been more disconnected from HSFO moves.
